An Estimation of Laffer Curve in Iran: A Non-Linear Approach

Document Type: Research Paper



Laffer curve indicates relationship between tax rate and tax income. The aim of this paper is estimating of laffer curve in Iranian economy. To do so, we have used threshold regression method. Empirical results indicate that since the tax rate is low (the threshold value is less than 0.0848) in two-regime model, tax rate and tax income have a significant positive relationship, but when the tax rate is high (the threshold value is larger than 0.0848), tax rate and tax income have a significant negative relationship. 


Article Title [Persian]

برآوردی از منحنی لافر در ایران: یک رویکرد غیرخطی

Authors [Persian]

  • هانیه صداقت کالمرزی
  • میر حسین موسوی
Abstract [Persian]

منحنی لافر نشان‌دهنده ارتباط بین نرخ مالیات و درآمدهای مالیاتی است. هدف از این مقاله، برآورد نمودن منحنی لافر در اقتصاد ایران است. برای انجام این هدف، از روش رگرسیون آستانه­ای استفاده شده است. نتایج برآورد مدل نشان می‌دهد تا زمانی‌که نرخ مالیات کم است (نرخ مالیات کمتر از 0848/0 )، نرخ مالیات و درآمدهای مالیاتی ارتباط مثبت و معنی­داری با یکدیگر دارند اما زمانی‌که نرخ مالیات زیاد است (نرخ مالیات بیشتر از 0848/0)، نرخ مالیات و درآمدهای مالیاتی ارتباط منفی و معنی­داری دارند.

Keywords [Persian]

  • منحنی لافر
  • رویکرد رگرسیون آستانه‌ای
  • ایران
Abounoori, E., & Nademi, Y. (2010). Government Size Threshold and Economic Growth in Iran. International Journal of Business and Development Studies, 2, 95-108.

Becsi, Z. (2012). The shifty Laffer curve. Economic Review, (Q3), 53-64.

Berman, E. P., & Milanes-Reyes, L. M. (2013). The Politicization of Knowledge Claims: The “Laffer Curve” in the US Congress. Qualitative sociology, 36(1), 53-79.

Burian, S., & Brčák, J. (2013). Relationship Between Capital Tax Rate and Tax Quota in Europe. International Advances in Economic Research, 1-2.

Busato, F., & Chiarini, B. (2013). Steady state Laffer curve with the underground economy. Public Finance Review.

Claessens, S. (1990). The debt laffer curve: Some estimates. World Development, 18(12), 1671-1677.

Colombatto, E. (2013). An alternative to the Laffer curve: Theory and consequences. The Review of Austrian Economics, 1-18.

Creedy, J., & Gemmell, N. (2014). Measuring Revenue-Maximising Elasticities of Taxable Income: Evidence for the US Income Tax.

Cung, N. H., Zhou, Q. S., & Liu, H. (2014, January). Determinants of Revenue of Personal Income Tax in Vietnam. In Proceedings of 2013 4th International Asia Conference on Industrial Engineering and Management Innovation (IEMI2013) (pp. 267-277). Springer Berlin Heidelberg.

Dahlby, B., & Ferede, E. (2011). What does it cost society to raise a dollar of tax revenue? The marginal cost of public funds. The Marginal Cost of Public Funds (March 16, 2011). CD Howe Institute.

Feldstein, M. (1995) The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act. Journal of Political Economy 103, 551-572.

Fève, P., Matheron, J., & Sahuc, J. G. (2012). The Laffer Curve in an Incomplete-Markets Economy. TSE Working Paper, 12.

Francesco, Z. (2012). The Laffer Curve in a Frictional Labor Market. The BE Journal of Macroeconomics, 12(1), 1-23.

Goldsbee, A. (1999). Evidence on the High-Income LafferCurve from Six Decades of Tax Reform. Brookings Papers on Economic Activity, 1-47.

Gross, D. (2012). Effects of Wealth Distribution In a Progressive Tax Model. Student Papers Complex Adaptive Systems, Fall 2012, 21.

Gruber, J. and E. Saez (2002). The Elasticity of Taxable Income: Evidence and Implications. Journal of Public Economics, 84, 1-32.

Hansen, B., (2000). Sample splitting and threshold estimation. Econometrica, 68: 575-603.

Hansen, B., (1996). Inference when a nuisance parameter is not identified under the null hypothesis, Econometrica, 64, 413-430.

Heijman, W. J. M., & Van Ophem, J. A. C. (2005). Willingness to pay tax: The Laffer curve revisited for 12 OECD countries. Journal of Socio-Economics, 34(5), 714-723.

Holter, H. A., Krueger, D., & Stepanchuk, S. (2014). How Does Tax Progressivity and Household Heterogeneity Affect Laffer Curves?. Available at SSRN.

Hsing, Y. (1996). Estimating the Laffer curve and policy implications. Journal of Socio-Economics, 25(3), 395-401.

Ihori, T., & Yang, C. C. (2012). Laffer paradox, Leviathan, and political contest. Public Choice, 151(1-2), 137-148.

Jafari Samimi, A., Nademi, Y., & Zobeiri, H. (2010). Government size & Economic Growth: A threshold regression approach in selected Islamic countries. Australian Journal of Basic and applied sciences.

Jafari Samimi, A., Nademi, Y., & Zobeiri, H. (2010). Tax Ratio Threshold and Economic Growth in Iran. Australian Journal of Basic and applied sciences.

Jafari Samimi, A., Zobeiri, H., Samani, H. A., & Nademi, Y. (2011). Inflation and Inflation Tax in Iran: A Threshold Regression'Laffer Curve'Model. Journal of Economics & Behavioral Studies, 3(3).

Jafari Samimi, A., Nademi, Y., Ghaderi, S., & Hosseinzadeh, R. (2012). Inflation and Inflation Tax in Developing Countries; A Panel Threshold Approach. International Journal of Academic Research in Economics and Management Sciences, 1(1).

Kuo, Y. T. (2012). The effect of the change of income tax on labor supply: A case of Taiwan labor market's Laffer curve.

Laffer, A. (2012). The Laffer Curve and the Failure of Stimulus Spending. Available at SSRN 2182070.

Laffer, A. (2004-06-01). "The LafferCurve, Past, Present and Future.". Heritage Foundation. Retrieved 2007-12-11.

Megersa, K. A. (2014). The laffer curve and the debt-growth link in low-income Sub-Saharan African economies. University Library of Munich, Germany.

Oliveira, F. G. D., & Costa, L. (2013). The VAT Laffer Curve and the Business Cycle (No. 02). Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto).

Sillamaa, M.A. and M. Veal (2000). The Effects of Marginal Tax Rates on Taxable Income: A Panel Study of the 1988 Tax Flattening in Canada. Research Report no 354.

Trabandt, M. & Uhlig, H. (2009). How far are we from the slippery slope? The Laffer curve revisited (No. w15343). National Bureau of Economic Research.

Tsuchiya, Y. (2013). Simple analytics of the dynamic Laffer curve under alternative financing schemes: bridging the gap between fiscal stimuli and adjustments.

Tucker, I. (2010), Survey of Economics, Cengage Learning, p. 341

Usher, D. (2013). Two Sources of Bias in Estimating the Peak of the Laffer Curve (No. 1320).